Minyan Mailbag: Bernanke and the USD

Dangit!

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Dear Prof. Reamer,

I am just wondering how you reconcile your bullish view of the U.S. dollar and your bearish opinion of Fed-head Bernanke? If Bernanke's printing press is going to usher in economic pain, won't the U.S. dollar be the primary victim?

Thanks for all of the insightful commentary.

Minyan Jeff Diamond

MJD -

As with most things in life Jeff; it's all about timing. Long term I am extraordinarily bearish on the US Dollar (and Bernanke et al); they are now and will in the future be vigorously planting the seeds of hyperinflation. But that harvest won't be sown for several years because the secular forces of deflation are so strong (which will help the USD appreciate vis-a-vis other currencies). Once those secular forces of deflation abate (end of the decade is a good guess) the nascent hyperinflationary forces will start to grow. THAT is when the absolute bottom starts to fall out from underneath the USD. Till then, I suspect the EU vote, a significant economic weakening in the rest of the world, and diminished risk appetites will provide a nice bid to the USD.

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